Long-term supply, short-term demand meaning

Long-Term View of Supply, Short-Term View of Demand is an economic viewpoint used to explain the relationship between supply and demand in a market economy. According to this view, supply in the long run means that the supply of goods and services in the market over a longer time horizon is determined by factors such as production capacity, resource availability and technological progress. In the long run, the supply curve is vertical, i.e., the quantity of goods and services sold at a given price is limited.

The short-run view of demand means that the quantity of goods and services demanded in the market over a shorter time horizon is mainly influenced by factors such as consumer spending, credit policy and market expectations. In the short run, the demand curve is downward sloping, i.e., when prices rise, consumers' willingness to buy weakens, demand falls, and sales of goods and services decrease.

In economics, changes in supply and demand affect price and quantity adjustments. When the difference between the long-term view of supply and the short-term view of demand creates an imbalance between supply and demand, market prices and quantities change so that the market returns to a state of equilibrium between supply and demand.

It is important to note that the time horizons of "long term" and "short term" are relative, and the exact time frames may vary from one sector to another and from one economic cycle to another. In addition, this perspective is not absolutely applicable in the real economy, as changes in supply and demand are affected by a number of factors, and there may also be interdependence and interaction between supply and demand. Therefore, it is necessary to analyze both supply and demand factors in specific cases.